Rating Manual section 6 part 3: valuation of all property classes

Section 280: cold stores

This publication is intended for Valuation Officers. It may contain links to internal resources that are not available through this version.

1. Co-ordination

Cold stores are subject to co-ordination as outlined in the relevant Practice Note to this Section.

2. Description

2.1 General

The number of cold stores has increased significantly in recent years. The increase in home ownership of freezers has given added impetus to the frozen food market. This, combined with the method of distribution of large retail outlets and supermarkets has resulted in a healthy demand throughout the country for this type of unit. For updated state of the industry reports see the relevant Practice Note to this Section.

Cold stores are generally of 2 types.

a. Purpose built cold stores. The most modern stores are usually simple steel framed buildings clad in corrugated asbestos, corrugated aluminium sheeting, or more recently profiled steel plastic coated cladding and using polystyrene or urethane as an insulating material. From information now available it is clear that large cold stores can be built at costs below those constructed of traditional materials. Older cold stores were usually constructed on the framed principle in either ferro-concrete or steel, the brickwork infilling of hardbrick to reduce water soakage and frost damage. A wide variety of insulating materials was used including cork granules, cork slabs, glass wool and onozote.

b. Adapted cold stores, usually from a warehouse or similar, where the degree of adaption can vary considerably. A good conversion may be comparable with purpose-built accommodation, but some have disadvantages of which account must be taken.

2.2 Physical characteristics

2.2.1 Main user categories

Cold stores are of 2 main user categories:

a. they may be used in a manner similar to ordinary warehousing. In this case the store will tend to comprise a number of chambers, probably operating at different temperatures to accommodate various classes of goods. Great importance is attached to the design of such stores so as to achieve maximum efficiency and to prevent contamination of one class of goods by another.

b. those designed for use by an individual occupier for storage purposes in connection with his own trade or business. This category will usually comprise fewer chambers, perhaps only one, designed to accommodate a more limited variety of goods.

2.2.2 Physical features

The following matters are of interest in the valuation of cold stores:-

a. A supply of water should be available, the cheaper the better.

b. The ground should be suitable to receive the foundations and it is important that the ground should be free from surface water. Cases have been reported of serious defects brought about by “frost heave” caused through failure of the electric mat which is used where the floor of the cold store is in direct contact with the ground. Alternative methods of construction provide either an air space between the ground and the floor of the ` building or warm air ducting in the floor.

c. Where the store is designed to have different chambers at different temperatures it is necessary to have internal insulation between floors and walls in addition to the main external insulation. The thickness of this insulation must be balanced against the capacity of the plant as there is a limit beyond which it is no longer worthwhile to increase the thickness of insulation as a small increase in the capacity of the plant would compensate for temperature losses. The insulation should be firmly fixed to the walls and protected by dunnage rails so that goods cannot be stored right up to the wall.

d. Each chamber is provided with an airtight door and an airlock is sometimes provided to the main handling space. When chamber doors are open the circulation of air is minimised by a hanging sheet or, better, by a curtain of refrigerated air.

e. Multi-storey buildings are inevitable where site area is limited and in these buildings a floor height of 2.5m is usual. Lifts are essential in multi-storey premises and should preferably be totally enclosed and discharged into the handling space and not directly into the cold stores so that the movement of the lift does not force air circulation through the chambers.

2.2.3 Methods of refrigeration and cooling

There are two main types of refrigerating machines, namely those where the refrigerant is compressed and absorption machines where refrigeration is effected by heating the refrigerant.

The mechanical compression machine is almost universally employed for cold storage purposes and the majority of plant is electrically driven.

Cooling of the chambers can be effected in four main ways although it is not uncommon to find a combination of these methods all in one cold store-

a. by direct expansion piping where the refrigerant expands through a regulating valve into a coil of pipes contained in the chamber itself;

b. by brine circulation. In this method brine is cooled by means of direct expansion coils and is then pumped to coils in the cold chambers;

c. by air circulation whereby air is pumped through direct expansion coils which are fitted with a brine sparge to
the various chambers through trunking;

d. liquid recirculation system. This is an extension of the direct expansion system but provides for more flexible operation. There are cooling coils in the chambers as for brine or direct expansion systems.

Although the above summarises the main methods, variations may be found such as each chamber being provided with its own refrigerating unit which is cooled by brine circulation, the air in the chamber being continually recirculated through this unit.

All systems require cooling water for the condenser in the refrigerant circuit and this water is normally itself cooled by means of cooling towers or similar apparatus.

The direct expansion system is in fairly common use but is not very flexible in operation. The brine circulation system is more expensive both in operating and initial capital costs but is flexible in operation, it being comparatively easy to control temperatures in different chambers.

The air circulation system is cheapest in the first cost and has the advantage that no defrosting is necessary. This system results, however, in greater dehydration of the goods stored but it is necessary for certain classes of goods such as fruit.

The liquid recirculation system is superior to both the direct expansion and the brine circulation systems. Initial engine room costs are greater but the cost for cooling coils is no greater than for direct expansion or brine circulation systems. The operating costs are lower than for other systems unless used as a preliminary to air circulation. The liquid recirculation method is particularly useful for low temperature work.

Cold stores employing any system other than air circulation must be provided with systems of defrosting. This is effected either by the circulation of hot gas through the expansion coils or by the heating of the brine in the brine circulation system by means of a calorifier. Trays should be provided beneath the coils to drain away the melted “snow”. In some of the older cold stores the snow is removed manually but this is regarded as unsatisfactory today.

Cold stores for quick frozen products use freezers to freeze the incoming products before transfer to the cold storage chamber. Air blast freezers are the currently preferred type particularly for large tonnages of locally produced perishables.

An air blast freezer complemented with a humidity control system, adjustable for the different products to be frozen, reduces the moisture loss of the foodstuff and assists in maintaining the colour and texture of the produce until firmly frozen for the cold chamber.

2.2.4 Maintenance of buildings and plant

The life of cold store buildings in traditional construction is limited due to the moisture permeation problem since ice forms in the bricks and causes them to deteriorate. Refrigeration engineers generally consider that cold store buildings of traditional construction have a life of not more than 40 years.

The repair of insulation is a constant problem due to moisture permeating the insulation and ice building up, often forcing the insulation away from the wall. It is generally expected that after a period of 15 years insulation should be removed from the walls and replaced. It is not known yet whether these circumstances apply to polystyrene insulation.

The heaviest maintenance item in cold stores is in respect of chamber doors. These rapidly deteriorate since, unless the door frames are fitted with controlled electric heating cables, they tend to freeze shut and have to be forced open.

It is thought that the reasonable life of refrigerating machinery is about 25 years although much equipment has been in operation for periods considerably longer than this. However, after 25 years it is probable that the machinery is no longer an economic proposition.

2.2.5 Commercial operation

The operator of the warehouse type of cold store works under the normal Wharfingers Clause and appears to be relieved of practically all responsibility. It is usual to find, however, that in the interests of good business certain liabilities such as deterioration of goods resulting from a defect in the cold storage are accepted.

Goods in cold storage generally lose weight due to dehydration and this loss in weight is not the liability of the cold store operator. It is, however, obviously in his interests to keep this dehydration loss to a minimum in order to attract more customers. For the storage of certain classes of goods control of humidity in the air circulation system is important and for normal purposes humidity is kept between 75% to 80%.

In operating it is essential to leave space for good air circulation; thus the goods are stacked from ten to twelve centimetres above the floor. The height to which goods can be stacked depends on the handling equipment available but it is generally considered that the usable space extends to within 0.6m of the ceiling. The determination of this height is, however, complicated by roof beams, pipe coils and air circulation ducts.

Certain stores are given in Lloyds Register of Shipping. These are inspected at regular intervals by Lloyds’ Surveyors and the fact that they are included in Lloyds’ Register is a guarantee of their standard, and persons storing goods are reassured that it is unlikely that anything will go wrong with the refrigeration. The cubic content of stores shown in Lloyds’ Register is calculated as the gross internal air space inside the refrigeration chambers but with deductions for any permanent features such as pipe coils. The measurements are taken up to the walls allowing no space for air circulation.

2.2.6 Typical storage temperatures

The storage temperatures for typical articles in cold store are as follows:-

a. Butter: Stored at -12° to -11°C. Should be kept in tubs or boxes and packed one on top of the other with sufficient space for air circulation.

b. Cheese: Stored at 2° to 4°C. with ventilation. Humidity is of importance.

c. Eggs: There should be gentle air circulation and eggs should never be stored with any other produce. Temperatures between - 2° and 0°C. For shorter periods eggs may be stored at 3°C to 4°C.

d. Furs and Fabrics: May be stored at about -1°C to prevent moth eggs hatching.

e. Dried fish: Temperature -9°C for long storage with about 2°C for short period storage only. Cooling by air circulation gives the most satisfactory results.

f. Fruit: The temperature has a considerable effect on the rate of maturing of various types of fruit and the air circulation is also a relevant factor as the rate of ripening also depends on the concentration of the carbon dioxide present. Soft fruit storage is most easily effected if sugar is added or a syrup is made of the crushed fruit.

g. Hops: Stored at -2°C and the humidity should be kept at about 70%.

h. Meat: -10°C is the frozen meat temperature and most cold stores for the storage of frozen meat in England are at about -8°C. Stores for frozen meat should be cooled by brine piping since there is less loss of weight while the meat is in store. For a short period of storage it is better for the meat to be kept between -4°C and -5°C as this reduces the thawing period and the sweating when the meat is removed for sale.

i. Chilled meat should be kept at -2°C. The limit for this temperature is about 28 days.

j. Frozen Foods: Depending on the article being stored the range of temperature is from -20°C.to -29°C.

3. Survey requirements

3.1 Basis of measurement

The basis of measurement for cold stores is Gross Internal Area (GIA). Reference should be made to the Code of Measuring Practice for Rating Purposes in England and Wales.

Surveys should record details of the main structure, in particular the type of cladding and its insulation qualities. The design working temperature and the eaves height should be noted.

Regard should be had to the Relevant Practice Note for details of other measurements that are specifically required.

4. Cold stores as plant and machinery

The advice so far contained in this Section provides guidance on cold stores as a class, where such cold stores form the hereditament or a major part of it. However, smaller cold stores will be encountered, usually within buildings, and may fall to be rated as part of the hereditament under the provisions of the relevant Valuation for Rating (Plant and Machinery) Regulations.

A useful method of differentiating between these and other cold stores is to consider whether any such item:-

a. forms part of the setting in which the business is carried on (eg a purpose built cold store or one adapted from
a warehouse), or

b. forms part of the apparatus with which the business is carried on (eg a smaller cold store within a main building), and which may therefore be rateable as plant and machinery.

Whilst it may not always be easy to differentiate between (a) and (b), the above consideration should suffice in most instances and further assistance can be obtained from CEO (Rating) (via Technical Advisor) if required. For further consideration of cold stores as plant and machinery see the relevant Practice Note to this Section.

5. Basis of valuation

The relevant Practice Note to this Section should be consulted for details of the appropriate basis of valuation to be adopted, both for the different types of cold store and for different Rating Lists.

Practice note: 2017 - cold stores (stand alone)

1. Market appraisal

There was a significant trend away from cold produce to chilled and fresh over the period 2000 to 2008. However in recent years this has slowed as the recession has taken effect and this has pushed consumers back towards frozen goods which tend to be cheaper. During the lifetime of the 2010 list new cold stores have been built in England and Wales and most older stores have continued to trade and in some cases, have been refurbished and brought back into full use. The requirements demanded by supermarket and food processing operators along with the on going drive to reduce cost and carbon emissions continue to drive up standards and provide a stimulus for new development and industry growth. Industry reports suggest 1.6 % annual growth in the market sector during the period 2010 – 2015.

2. Changes from the last practice note

Structurally the scheme of valuation follows the pattern of that applied in assessing stand- alone cold stores for the 2000, 2005 and 2010 rating lists.

3. Ratepayer discussions

There have been no ratepayer or adviser discussions. Agents who were party to the memorandum of agreement on previous lists do not appear to show any desire to continue probably as consequence of their major clients, Christian Salvesen and TDG Novacold selling their interest to French logistics company Norbert Dentressangle. Norbert Dentressangle has recently announced their sale to XPO an American top ten worldwide logistics company keen to expand in Europe.

4. Valuation scheme

4.1 It is considered, based on the information available, that a valuation approach based upon rental comparison and adjusted to reflect any extra value associated with cold stores over and above that of ambient warehousing can be supported.

Rental evidence

4.2 Rental evidence on cold stores is limited. However it does indicate an uplift for cold stores above rental levels for equivalent warehouses.

Valuation basis

4.3 Valuations for this class should be on a rentals comparison basis, in line with levels of value, which would be appropriate for a warehouse of equivalent age, specification and size in the locality, with an addition on the cold store element to reflect the cold storage facility.

4.4 The addition to be made is detailed on the attached Appendix A. The addition has been derived from the analysis of rents for purpose built cold stores, to determine the cold store element.

4.5 In addition to the normal age allowances for an equivalent warehouse in the locality, if it is considered appropriate to adjust the addition made to reflect the effect of poor layout, age and obsolescence, the criteria for such allowances are shown in Appendix B.

4.6 Allowances should be made against that part of the valuation attributable to the cold store(s) only.

4.7 This Memorandum applies to stand alone purpose built cold stores only and not to cold or chill stores forming part of a larger hereditament. For those cold store / chill store elements value factors of 1.3 and 1.15 respectively should be made. These are not subject to the age and obsolescence allowances as outlined in this Practice Note which apply to stand alone cold stores only.

Appendix A

Rental evidence - rental approach

1 Based upon the warehouse tone for the locality an addition of 25 % should be made for the Cold Store area. The resultant total rate will be subject to age and obsolescence allowances as follows:

Category

1

2

3

4

5

6

7

8

Pre 1970

Late 1960’s-Mid 1970’s

Late 1970’s –Early 1980’s

Mid 1980’s

Early 1990’s

Mid 1990’s-to 2000

2000 to 2005

2005 to date

A/O 2017

50%

45%

35%

25%

20%

15%

5%

nil

For full explanation of the categories, see Appendix B below.

The local tone will take into account the following factors:

Age

Size

Location

Height

Heating

2 It is presumed that the relativities within the analysis of rental evidence that produced the local warehouse tone will be consistent with the relativities used for valuation. Where the tone includes heating then an adjustment for this will have to be made.

3 Regarding height adjustments, the normal adjustment for this, as per the standard tone for ambient warehousing and those used in the analysis of rental evidence in Appendix A is as per the example given below. However it is acknowledged that as the value is being derived from the local tone, the height adjustment across the network may vary from the ranges shown below. Consequently where the local scheme varies from the example, it should be followed.
3.5 to 2.5 m
Deduct up to max of 10% by interpolation
3.5 to 6.1m
No addition
6.1m to 9m
Interpolate subject to a maximum of 10% using the formula: Full working height less 6.1 m multiplied by 3.5% (i.e.10 % / 2.9) Round to 1 decimal point. i.e. Height of 8.24m would give 7.4 % addition
Above 9m
10% plus1% for each extra metre

4 It is the maximum useable height that is to be valued i.e. by reference to pallet sizes and regard should therefore be made to allow for any air circulation requirements over and above the top pallet of any racked storage system.

Appendix B

Revaluation 2017 - Cold Stores

Adjustments for Obsolescence and Other Disabilities

1 Over the period post war to present day there have been changes in:

(i) Technology - making improvements to the quality and performance of insulation and to door specification allowing more rapid closure thus retaining temperatures and reducing costs. In addition, the older types of insulation, both in respect of quality and form of construction and method of fixing, tend to be more prone to deterioration resulting in loss of efficiency and increased running costs in maintaining required temperatures. The older units adopted a ‘Smiths panel’ sandwich construction whereas more modern units are akin to ambient warehouses with an inner cold store “chamber”.

(ii) Configuration - earlier stores commonly were generally smaller and of lower height with multi-chambers allowing different products to be stored at different temperatures. In the early 1970s there was a move towards bulk long term storage requiring larger enclosures with increased eaves heights, but with relatively few doors. With the decline of EEC storage from the mid 1980s and the increase in demand for fresh and chill products, there has been a move towards throughput storage with rapid turnaround of goods requiring improved access and racking systems.

2 8 general types of cold store can be identified. The primary determinant is the specification and construction dates are given as guidance only as different occupiers in different locations moved to using new specifications at different times. Older stores may have been subject to upgrading - for example, enclosure of loading bays, installation of improved door closures, installation of racking systems, replacement of insulation panels, opening out of former multi-chambers to give larger storage capacity. Such improvements may warrant adjustment in the allowance to reflect these improvements:

3 Although the specification and method of construction of cold stores is not considered to have altered significantly since the early 1990’s it is recognised that the stores built prior to 2005 will be 10 to 20 years old when the 2017 List comes into force. The low operating temperatures over such a length of time will result in deterioration to the fabric of the building to an extent, albeit limited, over and above that experienced by ambient warehouses of a similar age. In recognition of this accelerated ageing an additional category (see 8 below) has been introduced for the most recent cold stores.

4 In general it is considered that the maximum allowance of 50%, notwithstanding the passage of time, should stand. This is due to the following: (i) the value of cold storage facilities is underpinned by their suitability for alternative ambient or chilled use and (ii) there appears to be no rental evidence to suggest that the maximum allowances adopted require further adjustment.

Categories of cold store

5 The ages are a guide only and the true nature and category of the hereditament will be determined by its age, specification and character as outlined below.

Category 1

Category 2

Constructed from late 1960s through to mid 1970s; designed for bulk storage without racking systems, but may now have racking installed; larger chambers for long term storage of single products; height under 10m - commonly 9.3 to 9.7m; open fronted loading bays; minimal door provision; often structural roof steel members are inside the chamber itself; insulation panels on timber frames; early examples have cork insulation, but after 1972/3 polystyrene material was commonly used; panel size gradually increasing with improvements in technology with later examples usually 4’ wide x 12’ high with correspondingly fewer joints.

Allowance: MAX 45%.

Category 3

Late 1970s to early 1980s ; enclosed loading bays (either internal or external to main structure) more common; large insulation panels using slab polystyrene; increased number of doors to allow improved throughput of goods; designed for use with storage systems; heights variable usually 9.3 to 10.3m.

Allowance: MAX 35%.

Category 4

Constructed from mid 1980s; loading bays enclosed (either internal or external to main structure); inner chamber with urethane or polystyrene large panel insulation; rapid closing doors; increased number of ports and docking facilities; designed to accommodate static or mobile racking systems; heights variable, usually to 10.3m or more and designed to suit purpose built racking.

Allowance: MAX 25%.

Category 5

Constructed from 1990; loading bays enclosed (either internal or external to main structure); inner chamber with urethane or polystyrene large panel insulation; rapid closing doors; increased number of ports and docking facilities; designed to accommodate static or mobile racking systems; heights usually to 12.3m or more and designed to suit purpose built racking.

Allowance: MAX 20%.

Category 6

Constructed from the mid 1990s; loading bays enclosed (either internal or external to main structure); inner chamber with urethane or polystyrene large panel insulation; rapid closing doors; increased number of ports and docking facilities; designed to accommodate static or mobile racking systems; heights usually to 12.3m or more and designed to suit purpose built racking.

Allowance: MAX 15%.

Category 7

Constructed from 2000; loading bays enclosed (either internal or external to main structure); inner chamber with urethane or polystyrene large panel insulation; rapid closing doors; increased number of ports and docking facilities; designed to accommodate static or mobile racking systems; heights usually to 12.3m or more and designed to suit purpose built racking.

Allowance: MAX 5%.

Category 8

Constructed from 2005; loading bays enclosed (either internal or external to main structure); inner chamber with urethane or polystyrene large panel insulation; rapid closing doors; increased number of ports level loading and docking facilities to suit the logistics; designed to accommodate static, mobile and or bespoke racking systems; heights usually to 15.0 m or more.

2. Rental evidence

3. Valuation approach

3.1 It is considered, based on the information available, that a valuation approach based upon rental comparison and adjusted to reflect any extra value associated with cold stores over and above that of ambient warehousing can be supported.

4. State of the market

4.1 The period from 2003 to 2008 saw a continuation of the trend in consumer preference away from frozen food to chilled and fresh product. This has led to further consolidation within the cold store sector of the storage and logistics industry and the loss of names traditionally associated with Frozen product, the premier example being Celsius First (formerly Frigoscandia) who entered into administration in early 2006. The period also witnessed the absorption of a number of small and medium sized operators into the Innovate Logistics Group. Innovate bucked the trend somewhat by constructing new facilities at some locations until it too entered into administration during the summer of 2008. The loss of these 2 major players did not itself result in a significant loss in stock as the assets of both companies were acquired by others, most notably by the Yearsley Group who now control some 167,000 frozen and chilled pallet sites. The supermarkets reacting to market demand also reduced their Cold storage capacity within multifunctional distribution facilities, utilising the space for chilled product

Many of the older facilities, particularly the Wartime Ministry of Food depots that tended to be located within urban areas were sold for residential redevelopment during the period. Other older facilities were converted to chill or ambient usage further reducing cold store capacity.

It is understood pallet rates for public storage did witness some recovery toward the end of the period and it remains to be seen whether the significant rise in commodity prices, most particularly food and fuel will result in a switch away from fresh and chilled product to cheaper frozen alternatives.

The strict standards demanded by supermarket operators and the on going drive to reduce cost and carbon emissions continue to drive up standards and provide a stimulus for limited new development.

5. Method of measurement

5.1 Properties should be measured to GIA. Referencing requirements are as indicated for general industrial buildings in RM Section 6 part 3 section 380 and to the specific requirements referred to in Section 280 (3.1)

6. Valuation basis

6.1 Valuations for this class should be on a rentals comparison basis, in line with levels of value, which would be appropriate for a warehouse of equivalent age, specification and size in the locality, with an addition on the cold store element to reflect the cold storage facility.

6.2 The addition to be made is detailed on the attached Appendix A. The addition has been derived from the analysis of rents for purpose built cold stores, to determine the cold store element.

6.3 In addition to the normal age allowances for an equivalent warehouse in the locality, if it is considered appropriate to adjust the addition made to reflect the effect of poor layout, age and obsolescence, the criteria for such allowances are shown in Appendix B

6.4 For the avoidance of doubt of the order of adjustment, a spreadsheet ready- reckoner is shown at Appendix C.

6.5 Allowances should be made against that part of the valuation attributable to the cold store(s) only.

6.6 This Memorandum applies to stand alone purpose built cold stores only and not to cold or chill stores forming part of a larger hereditament.

This property is valued using the non-bulk server. The manual can be accessed here.

Appendix A

Rental evidence - rental approach

Based upon the warehouse tone for the locality an addition of 25 % should be made for the Cold Store area. The resultant total rate will be subject to age and obsolescence allowances as follows:

Category

1

2

3

4

5

6

7

Pre 1970

Late 1960’s-Mid 1970’s

Late 1970’s –Early 1980’s

Mid 1980’s

Early 1990’s

Mid 1990’s-to 2000

2000 to date

A/O

50%MAX

40%MAX

30%MAX

20%MAX

10%MAX

10%MAX

NIL

For full explanation of the categories, see Appendix B below

The local tone will take into account the following :

Age

Size

Location

Height

Heating

It is presumed that the relativities within the analysis of rental evidence that produced the local warehouse tone will be consistent with the relativities used for valuation. Where the tone includes heating then an adjustment for this will have to be made.

Regarding height adjustments, the normal adjustment for this, as per the standard tone for ambient warehousing and those used in the analysis of rental evidence in Appendix A is as follows:

3.5 to 2.5 m deduct up to max of 10% by interpolation

3.5 to 6.1m no addition

6.1m to 9m interpolate subject to a maximum of 10% using the formula : Full working height less 6.1 m multiplied by 3.5% ( i.e.10 % / 2.9) Round to 1 decimal point. i.e. Height of 8.24m would give 7.4 % addition

Above 9m 10% plus1% for each extra metre

It is the maximum useable height that is to be valued i.e. by reference to pallet sizes and regard should therefore be made to allow for any air circulation requirements over and above the top pallet of any racked storage system.

Appendix B

Revaluation 2010 - Cold Stores

Adjustments for obsolescence and other disabilities

Over the period post war to present day there have been changes in:

(i) Technology - making improvements to the quality and performance of insulation and to door specification allowing more rapid closure thus retaining temperatures and reducing costs. In addition, the older types of insulation, both in respect of quality and form of construction and method of fixing, tend to be more prone to deterioration resulting in loss of efficiency and increased running costs in maintaining required temperatures. The older units adopted a ‘Smiths panel ‘ sandwich construction whereas more modern units are akin to ambient warehouses with an inner cold store “chamber”.

(ii) Configuration - earlier stores commonly were generally smaller and of lower height with multi-chambers allowing different products to be stored at different temperatures. In the early 1970s there was a move towards bulk long term storage requiring larger enclosures with increased eaves heights, but with relatively few doors. With the decline of EEC storage from the mid 1980s and the increase in demand for fresh and chill products, there has been a move towards throughput storage with rapid turnaround of goods requiring improved access and racking systems.

Five general types of cold store can be identified. The primary determinant is the specification and construction dates are given as guidance only as different occupiers in different locations moved to using new specifications at differing times. Older stores may have been subject to upgrading - for example, enclosure of loading bays, installation of improved door closures, installation of racking systems, replacement of insulation panels, opening out of former multi-chambers to give larger storage capacity - such improvements may warrant adjustment in the allowance to reflect these improvements: Although the specification and method of construction of cold stores is not considered to have altered significantly since the early 1990’s it is recognised that the stores built prior to 2000 will be 10 to 20 years old when the 2010 List comes into force. The low operating temperatures over such a length of time will result in deterioration to the fabric of the building to an extent, albeit limited, over and above that experienced by ambient warehouses of a similar age. In recognition of this accelerated ageing an additional category 7 has been introduced

In general it is considered that the underpinning of the value of cold storage facilities by their suitability for alternative ambient or chilled use acts as a buffer to prevent any further depreciation in value due to the additional passage of time leading to the 2010 revaluation. Furthermore there appears to be no rental evidence to suggest that the allowances adopted in respect of the 2005 List require adjustment beyond a formal recognition of the maximum allowance of 50% in respect of category 1 stores conceded during the life of the 2005 List

The ages are a guide only and the true nature and category of the hereditament will be determined by its age, specification and character as outlined below.

Category 1

Category 2

Constructed from late 1960s through to mid 1970s; designed for bulk storage without racking systems, but may now have racking installed; larger chambers for long term storage of single products; height under 10m - commonly 9.3 to 9.7m; open fronted loading bays; minimal door provision; often structural roof steel members are inside the chamber itself; insulation panels on timber frames; early examples have cork insulation, but after 1972/3 polystyrene material was commonly used; panel size gradually increasing with improvements in technology with later examples usually 4’ wide x 12’ high with correspondingly fewer joints.

Allowance: 40 % MAX.

Category 3

Late 1970s to early 1980s ; enclosed loading bays (either internal or external to main structure) more common; large insulation panels using slab polystyrene; increased number of doors to allow improved throughput of goods; designed for use with storage systems; heights variable usually 9.3 to 10.3m. Allowance: 30 % MAX.

Category 4

Constructed from mid 1980s; loading bays enclosed (either internal or external to main structure); inner chamber with urethane or polystyrene large panel insulation; rapid closing doors; increased number of ports and docking facilities; designed to accommodate static or mobile racking systems; heights variable, usually to 10.3m or more and designed to suit purpose built racking.

Allowance: 20 % MAX.

Category 5

Constructed from 1990; loading bays enclosed (either internal or external to main structure); inner chamber with urethane or polystyrene large panel insulation; rapid closing doors; increased number of ports and docking facilities; designed to accommodate static or mobile racking systems; heights usually to 12.3m or more and designed to suit purpose built racking.

Allowance: 10 % MAX.

Category 6

Constructed from the mid 1990s; loading bays enclosed (either internal or external to main structure); inner chamber with urethane or polystyrene large panel insulation; rapid closing doors; increased number of ports and docking facilities; designed to accommodate static or mobile racking systems; heights usually to 12.3m or more and designed to suit purpose built racking.

Allowance : 5% MAX.

Category 7

Constructed from 2000; loading bays enclosed (either internal or external to main structure); inner chamber with urethane or polystyrene large panel insulation; rapid closing doors; increased number of ports and docking facilities; designed to accommodate static or mobile racking systems; heights usually to 12.3m or more and designed to suit purpose built racking

Allowance : NIL

Appendix C

Cold stores ready reckoner

Stand alone purpose built cold stores

Practice note: memorandum of agreement

This Memorandum constitutes guidance on the method of valuation for stand alone purpose built Cold Stores accepted by the Chief Executive for the Valuation Office. Agent representatives of the major Cold Store Users have been invited to enter into negotiations to agree its contents but have yet to do so

This memorandum has been drawn up with reference to current statute law and relevant case law.

CEO has considered the available information and is of the opinion that a valuation approach based upon rental comparison and adjusted to reflect any extra value associated with cold stores over and above that of ambient warehousing can be supported.

This approach has been discussed with the Scottish Assessors and it is likely that they will follow similar lines.

Attention is drawn to the fact that it is now VOA policy that all cold stores are data captured for use on RSA and all the necessary arrangements for this should be made accordingly.

The basis

1.Valuations for this class should be on a rentals comparison basis, in line with levels of value, which would be appropriate for a warehouse of equivalent age, specification and size in the locality, with an addition on the cold store element to reflect the cold storage facility.

2. The addition to be made is detailed on the attached Appendix A. The addition has been derived from the analysis of rents for purpose built cold stores, to determine the cold store element.

3.In addition to the normal age allowances for an equivalent warehouse in the locality, if it is considered appropriate to adjust the addition made to reflect the effect of poor layout, age and obsolescence, the criteria for such allowances are shown in Appendix B .

4. For the avoidance of doubt of the order of adjustment, a spreadsheet ready- reckoner is shown at Appendix C .

Allowances should be made against that part of the valuation attributable to the cold store(s) only.

This Memorandum applies to stand alone purpose built cold stores only and not to cold or chill stores forming part of a larger hereditament.

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